751 F.3d 796 (7th Cir. 2014), 13-3005, Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc.

Docket Nº:13-3005
Citation:751 F.3d 796, 110 U.S.P.Q.2d 1872
Opinion Judge:Wood, Chief Judge .
Party Name:ADVANCED TACTICAL ORDNANCE SYSTEMS, LLC, Plaintiff-Appellee, v. REAL ACTION PAINTBALL, INC., and K.T. TRAN, Defendants-Appellants
Attorney:For Real Action Paintball, Incorporated, K. T. Tran, Defendants - Appellants: Paul B. Overhauser, Overhauser Law Offices Llc, Greenfield, IN.
Judge Panel:Before WOOD, Chief Judge, and POSNER and KANNE, Circuit Judges.
Case Date:May 09, 2014
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 796

751 F.3d 796 (7th Cir. 2014)

110 U.S.P.Q.2d 1872

ADVANCED TACTICAL ORDNANCE SYSTEMS, LLC, Plaintiff-Appellee,

v.

REAL ACTION PAINTBALL, INC., and K.T. TRAN, Defendants-Appellants

No. 13-3005

United States Court of Appeals, Seventh Circuit

May 9, 2014

Argued January 7, 2014.

As Corrected May 12, 2014.

Page 797

Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 1:12-CV-296-JVB -- Joseph S. Van Bokkelen, Judge.

For Real Action Paintball, Incorporated, K. T. Tran, Defendants - Appellants: Paul B. Overhauser, Overhauser Law Offices Llc, Greenfield, IN.

Before WOOD, Chief Judge, and POSNER and KANNE, Circuit Judges.

OPINION

Page 798

Wood, Chief Judge .

Some readers of our opinions may be familiar with paintball, a type of war game in which the players shoot charges of paint at one another. Paintballs, it turns out, are not the only kind of nonlethal projectile that can be used in this way. Our case concerns a more serious product, known to Advanced Tactical Ordnance Systems (Advanced Tactical) by the name PepperBall (a ball filled with a pepper-spray-like irritant). Police departments, private security firms, and comparable organizations are the primary consumers of these items. This is a trademark infringement action, brought by Advanced Tactical against a company that calls itself Real Action Paintball, Inc., and its president, K.T. Tran. (We refer to both as Real Action, because there is no material difference between the company and its president for purposes of this appeal.) Although the parties have focused in their briefs on the preliminary injunction the district court granted, we have a more fundamental problem with the case. We conclude that the district court lacked personal jurisdiction over defendant Real Action, which preserved its objection on this point. We therefore reverse and remand with directions to dismiss on that basis.

I

Advanced Tactical manufactures and sells PepperBall branded items, including PepperBall projectile irritants. Its headquarters is allegedly in Indiana, though that is less clear than it might be--the company appears to have at least one office in California. It became the manufacturer and seller of PepperBall-branded items in 2012 after it acquired trademarks and other property in a foreclosure sale from a company called PepperBall Technologies Inc. PepperBall Technologies Inc. was located in California. Before the foreclosure, PepperBall Technologies had purchased its irritant projectiles from at least two sources: Perfect Circle, half owner of Advanced Tactical, and a Mexican company called APON. After Advanced Tactical acquired PepperBall Technologies, APON ceased its work as an assembler or manufacturer for PepperBall projectiles.

Page 799

Around the time of foreclosure, APON's chief operating officer, Conrad Sun, a citizen of California, contacted Real Action Paintball Inc., a California company, to see if Real Action was interested in acquiring irritant projectiles from APON. The answer was yes. The parties concluded their deal in August 2012, after which Real Action posted on its website and sent through its email list an announcement that it had acquired the " machinery, recipes, and materials once used by PepperBall Technologies Inc." That announcement is central to the merits, because it arguably implied that after PepperBall Technologies ceased to exist, Real Action was the only maker of PepperBall irritant projectiles.

Advanced Tactical soon caught wind of Real Action's announcement and fired off a cease-and-desist letter. In response, Real Action added a disclaimer to the original message, stating that it was neither associated nor affiliated with PepperBall Technologies and its brands, and that Real Action projectiles were not made by the current PepperBall Technologies (the name under which Advanced Tactical was doing business). Unsatisfied, Advanced Tactical filed this suit in the District Court for the Northern District of Indiana. It offered a number of different theories of recovery, including intentional violations of the Lanham Act, 15 U.S.C. § 1111 et seq., common law trademark infringement and unfair competition, trade dress infringement, and misappropriation of trade secrets.

The complaint alleged that personal jurisdiction was proper under Indiana's long-arm statute, which is found in Trial Rule 4.4(A). Each defendant, it asserted, engaged in conduct satisfying one or more of the following: doing any business in Indiana, via an interactive website capable of accepting orders from citizens of Indiana (Rule 4.4(A)(1)); engaging in tortious acts outside Indiana while knowing they would harm citizens of Indiana (Rule 4.4(A)(3)); causing damage in Indiana while deriving substantial revenue from goods sold in Indiana (same); and conspiring to engage in tortious conduct calculated to harm a citizen of Indiana (same). Real Action contested personal jurisdiction. In response to the district court's query why Indiana was proper and why California was not preferable, Advanced Tactical pointed to the " blast email" that Real Action sent to all of its customers, " many of whom are located here in the state of Illinois. I mean, state of Indiana." Advanced Tactical also noted that Real Action regularly emailed...

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